Ghana Delays Support Cocoa

COCOA

July Cocoa was slightly lower early Thursday after a modest rally on Wednesday that took the market to its highest level this week. The market has been chopping around this month, but it does have a series of higher highs and higher lows that suggest a potential bottom. Last week’s 1^st quarter grind data was mixed, with a lower than expected number out of Europe but an improvement in Asia. However, the economic uncertainty from high energy prices war raises concerns about demand, especially in Asia. Growers in Ghana told Reuters that payment delays for their previously harvested main crops are preventing them from harvesting the mid-crop, from expected to be have strong yields. It also raises fertilizer costs, which could affect production down the road.

COTTON

July Cotton sold off sharply on Wednesday after reaching new contract, and it extended those losses early Thursday. The market rallied from 64.69 on February 6 to 81.79 at Wednesday’s high for a gain of 17.10 (+26%), and in the span of 2 ½ months, which left the market technically oversold and vulnerable to a correction. The market seemed to be doing a good job of bidding for acres as the planting season approached. Drought conditions in areas representing roughly 97% of US cotton production was likely the main culprit for the rally. Rain chances have improved for the next week or so, but it remains to be seen whether it will be enough to materially change soil moisture conditions.

SUGAR

July Sugar extended this week’s modest rally by a hair early Thursday, but it may take some time to establish a base before embarking on a significant rally. The low this week was just above the contract low in February. World production forecasts for 2025/26 and 2026/27 have been slipping, but a large global surplus is still expected for 2025/26, which may keep a lid on rallies. On the other hand, the trend toward higher ethanol production in Brazil may limit sugar output more than anticipated. On Wednesday Rabobank pointed out that Brazil ethanol dropped 7% for the week ending April 17, which they credited to an acceleration in cane harvesting and ethanol production. Brazil’s new crop marketing officially begins in April, and crushing activity usually reaches a peak in July. The first official report from Unica for the 2026/27 season may come towards the end of the month. India’s output may be smaller in 2026/27 with lower than normal monsoon rains bought on by El Nino.

COFFEE

July Coffee was higher early Thursday. Making a new high for the week. The market has been consolidating for the past month or so as it has been awaiting the arrival of the Brazilian crop. The robusta harvest should be underway, and the arabica harvest should begin next month. Rabobank also noted that robusta exports from Brazil doubled in the first 17 days of April relative to a year earlier. Brazil’s arabica crop is expected to be around 48-50 million bags this year versus 36-38 million last year. The robusta crop is expected to hold steady with last year at around 25-27 million. After reaching record highs in October, coffee prices fell to their lowest level since last July in February, but the approaching harvest could limit further gains. Dealers said robusta coffee flows from Indonesia and Uganda are diminishing for seasonal reasons.

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